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Analysts Expect Flat Revenue for Baxter in 3Q16

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Oct. 24 2016, Updated 9:05 a.m. ET

Revenue estimates

On October 25, 2016, Baxter International (BAX) will announce its fiscal 3Q16 earnings for the period ending September 30, 2016. Wall Street has estimated Baxter’s 3Q16 revenue to be about $2.55 billion, a marginal decline from last quarter’s revenue of ~$2.58 billion. Investors can gain exposure to Baxter by investing in the iShares Edge MSCI Min Vol USA ETF (USMV). Baxter makes up ~0.57% of the fund.

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The graph above compares analyst estimates with the actual revenue reported by Baxter in previous quarters. The revenue estimates for 3Q16 continue to be driven by the company’s restructuring initiatives, new product launches, partnerships and collaborations, and strong free cash flow. For details on Baxter’s recent launches and partnerships, read Baxter International’s Recent Product Launches and Partnerships.

Analysts estimate flat YoY (year-over-year) sales growth in 3Q16 on account of the continued negative impact of generic competition for cyclophosphamide in the United States and currency headwinds and weakness in some of the company’s business segments.

Whereas Baxter has provided guidance of 3%–4% growth in annual sales on a constant currency basis in 2016, in 3Q16, the company expects to generate constant currency sales growth of 3%–4% and reported sales of 2%–3%. Major competitors ResMed (RMD), BD (BDX), and C. R. Bard (BCR) expect to generate sales growth of approximately 15.4%, 5.2%, and 7.6% respectively, in their recently ended quarters.

Segment-wise estimates

Baxter expects low double-digit sales in its fluid systems franchise and expects its integrated pharmacy solutions business to decline by the low-single digits. The company’s surgical care and renal franchises are expected to register growth in fiscal 2016. The renal business segment is expected to grow by ~3%–4% in 2016, compared with ~1% in 2015.

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